Use Big Data to Find New Micromarkets

Sophisticated sales organizations now have the ability to combine, sift, and sort vast troves of data to develop highly efficient strategies for selling into micromarkets. While B2C companies have become adept at mining the petabytes of transactional and other purchasing data that consumers generate as they interact online, B2B sales organizations have only recently begun to use big data to inform overall strategy and tailor sales pitches for specific customers in real time. Yet the payoff is huge. In fact, we’ve found that micromarket strategy is perhaps the most potent new application of big-data analytics in B2B sales.

For a micromarket strategy to work, however, management must have the courage and imagination to act on the insights revealed by this type of analysis. Most sales leaders deploy resources on the basis of the current or historical performance of a given sales region. Going after future opportunities at the micromarket level can seem risky, but basing strategy on old views of markets and their past performance is riskier still.

Once management is on board, the sales team needs to understand the rationale behind the micromarket strategy and have simple tools that make it easy to implement. That means aligning sales coverage with opportunity and creating straightforward sales “plays” for each type of opportunity.

Align sales coverage with opportunity. During the annual sales-planning process, managers determine how to invest resources to capture anticipated demand. The first step is to overlay the rough allocation of resources across markets on the basis of their overall potential. But instead of then applying salespeople consistently across customers, managers use insights about growth opportunities and recommended coverage models for various market types to fundamentally rethink their reps’ distribution.

For example, a high-growth urban pocket with low competitive intensity where a company does not have much coverage should add “hunter” capacity; depending on customer density, that market might be able to sustain a few such reps, each specializing in a particular set of customer segments. A lower-growth market where the company has significant share would require “defensive farming” — that is, fewer reps, but with strong skills in account management. Local sales managers should be trained on how to use the data from the opportunity map to identify more precisely where they want their reps to spend their time and how they want to size their territories.

Consider the case of a chemicals company. Instead of looking at current sales by region, as it had always done, the company examined market share within customer industry sectors in specific U.S. counties. The micromarket analysis revealed that although the company had 20% of the overall market, it had up to 60% in some markets but as little as 10% in others, including some of the fastest-growing segments. On the basis of this analysis, the company redeployed its sales force to exploit the growth.

For instance, one sales rep had been spending more than half her time 200 miles from her home office, even though only a quarter of her region’s opportunity lay there. This was purely because sales territories had been assigned according to historical performance rather than growth prospects. Now she spends 75% of her time in an area where 75% of the opportunity exists — within 50 miles of her office. Changes like these increased the firm’s growth rate of new accounts from 15% to 25% in just one year.

Create sales plays for each type of opportunity. Micromarket analyses present myriad new opportunities, so the challenge for companies is how to help a generalist sales force effectively tailor messaging and materials to the opportunity.

Companies should identify groups of micromarkets — or “peer groups” — that share certain characteristics. For example, one peer group might be high-growth micromarkets with limited competitive intensity. Another might be made up of markets with similar operating cost structures. Because they are structurally similar, peer groups represent similar sales opportunities. Companies usually find that a set of four to 10 peer groups is a manageable number.

For each peer group, marketing managers develop the strategy and “play”–the best way to sell into that set of customers or market. For example, the chemicals company grouped its 70 micromarkets into four peer groups and outlined a strategy for each, such as “invest,” in which it sought to capture an outsize share of growth, or “maintain,” in which it sought to hold on to its market share while maximizing operating efficiencies. The play usually encompasses guidance on the offer, pricing, and communications and may include tailored collateral materials. Companies typically devise and perfect plays either by adapting approaches that have been successful in similar settings or by testing new plays in pilot markets. One telecommunications company we spoke with continually tested plays on different customer segments to determine which offers at which price points with which types of services were most successful in various markets.

Support the sales force in executing the plays. For a micromarket strategy to succeed, the sales training has to be experiential. Salespeople should engage with opportunity maps that reveal hot (and cool) micromarkets in a given geography and test their intuition against hard data. (It can be eye-opening for them to discover that data analysis is often superior to anecdote in this realm.) Training should also allow them to act out and hone the recommended sales plays. Not only does this hands-on engagement help win over sales reps, but it’s a much more effective teaching method than lectures or demonstrations.

In addition to interactive training, reps will need direct coaching on specific pitches. To this end, several leading companies have created in-house “win labs” in which sales and marketing experts help reps craft their pitches. (The opportunity map, devised early in a micromarket analysis, provides invaluable information because it reveals drivers of demand: what makes a given customer buy.) Salespeople are required to bring their pitch plans to the win lab — usually virtually — and the lab team provides data, insights, and value-proposition collateral about the market or similar customers that the rep can use to create a sales play for a specific customer.

Finding growth with big data is more than an add-on; it affects every aspect of a business, requiring a change in mind-set from leadership down to the front lines. Micromarket strategies are demanding, but they consistently give sales a competitive edge. Sales leaders should ask whether they can afford not to embrace big data.

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